Driving a car without insurance is probably one of the scariest things I can think of doing in life. According to the National Highway Transportation Safety Administration, in 2006, 1 in 100 cars were involved in an accident that resulted in an injury or death of at least one occupant. The chance of being in an accident that resulted in property damage was even higher. Given these odds, driving without insurance is a very bad idea.
Driving Without Insurance Is A Huge Mistake
Let us take a look at the big financial picture of driving without insurance. The big deal is if you are at fault. Being at fault means that you caused the accident and you are going to have to pay for it. If you have insurance great your insurance will cover most of the expenses of the accident on your behalf up to the limits covered in your policy. (see Auto Insurance - Understanding The Basics for more information about policy basics.)
At Fault In An Accident - Jail Time
What happens in the case where you are at fault and do not have insurance? First of all, driving without insurance in all 50 states is illegal and you will most likely end up paying some heavy fines and possibly some jail time. For example, in Massachusetts, your fines could be anywhere from $500 to $5,000 and you could be sentenced to up to one year in jail. In other states, your car will be immediately impounded if you are caught driving without insurance.
At Fault In An Accident - Big Time Money
Setting aside fines and jail time, what else could driving without insurance cost you? Again, if you are at fault in an accident you could be on the hook for paying for property damage to your car and the other driver's car(s), medical bills for you and other people in your car and for the other driver and their occupants. Additionally, you could be faced with paying other folks in your car or other drivers for pain and suffering, lost wages, loss of enjoyment of life, disfigurement and scarring, loss of consortium, funeral expenses if you are convicted of wrongful death, and perhaps even punitive damages. Getting hit with these kinds of expenses could financially ruin someone for a very long time.
Auto Financing Requires Insurance
Let us look at one more risk in not having car insurance - financing. When you get a loan for a car the lender financing the vehicle will require you to have insurance. This is so that if you get into an accident and the car is totalled, the lender will get some if not all of their money back. If you cancel your insurance and get into an accident you will still have to keep paying on your car. Can you imagine how horrible that would be to have to keep making payments on a car that you no longer drive all because you did not have insurance on the car for some reason? Often, insurance companies will notify your lender if you cancel your car insurance or if you let your policy expire without renewing it. Your lender could have the right to either call your note (make you pay your loan back immediately or they will repossess the car from you) or they could find another insurance carrier to insure the car that you would be responsible for paying. Believe this - the payment you will make to that insurance carrier will be a lot more expensive than your own carrier, so you are better off maintaining your own insurance policy.
Excuses or Reasons To Not Have Car Insurance
What are some reasons why someone would drive without insurance? Probably the most common reason why someone would not have car insurance is due to the lack of money. Car insurance can be expensive, especially if you are young and just learning to drive, or if you have had an accident or two, or a traffic violation. You could also just be getting out of college and saddled with a lot of student loan and credit card debt. With many other financial obligations it is tempting to terminate the payment to car insurance temporarily until things get better. The trap here is that things; can take a long time to get better which would further extend the time without insurance which further increases the change of being in an accident. Pretty risky stuff.
Another reason why someone might not have insurance is because they have a tough time getting it. This could be caused by having poor credit and low credit scores. You also might be limited in your ability to get insurance if you fall into a high risk category such as someone who has had numerous accident claims in the past.
If you find yourself in a position of deciding whether or not to maintain your car insurance there are some alternatives you could look at so that you can make the monthly payments. Take a look at either or both of these articles on GetPreQualified.com called: 5 Old Fashioned Ways of Digging Yourself Out of Debt and Tips on Negotiating Your Debt with Collection Agencies.
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